Six key employment law issues employers need to plan for in 2021

Leading law firm Howes Percival has highlighted the six key areas of labor law employers must plan for in 2021.

Graham Irons, partner and labor law expert at Howes Percival, commented: “The Covid-19 pandemic has broken new ground for both employers and workers – from updating ever-changing government guidelines to adapting to homework and coping with the new ones Concept of vacation.

“With a focus on helping companies cope with the pandemic over the past year, several expected labor law changes, including the expansion of labor rules for unpaid employees, have been postponed. However, hoping vaccination will reach the start of the end of the pandemic, 2021 is likely to be a busy year for labor law, with several significant changes expected. ”

Extension of the vacation program

The Coronavirus Job Retention Scheme (CJRS) has been extended until April 30, 2021 and the introduction of the Job Support Scheme, which has been announced as the successor to the CJRS, has been postponed. A wider budget for economic support for Covid-19, which includes the next phase of economic support, is due to be announced on March 3, 2021.

National minimum wage

Millions of workers in the UK will receive a raise from April 2021 after the National Minimum Wage (NMW) and National Living Wage (NLW) rise.

The rate increases include a 2.2% increase in NLW, equivalent to a full-time worker of £ 345 per year. More young people will be eligible for the NLW as the age threshold will be lowered from 25 to 23, which means that the NLW will become the legal minimum wage for workers aged 23 and over.

Tax changes – IR35

The rules of work for external activities (IR35) will be extended to large and medium-sized private sector companies with effect from April 6, 2021. Originally planned for 2020, this reform has been postponed to help businesses during the Covid-19 pandemic.

Companies have to make their own decisions about the employment status of individuals. The HMRC released an updated version of its online verification tool (Check Employment Status Tool or ‘CEST’) in November 2020. As with the previous version of CEST, HMRC has stated that it will accept the determination as correct if it is correctly completed by the check.

Non-compete and exclusivity clauses

As part of its efforts to help economic recovery from the effects of Covid-19, the government is consulting the application of non-compete agreements (consultation ends on February 26, 2021).

Non-compete obligations can act as an obstacle by preventing employees from working for or starting a competing company. Therefore, the use of this type of restrictive covenant may be restricted in the future. Two main proposals are being considered and any change would have an impact on the drafting of employment contracts in the future, with many employers having to revise or update their existing employment contracts.


EU citizens living in the UK after December 31, 2020 can apply for “done” or “pre-determined” status under the EU comparison system. Withdrawn status, which allows the worker to stay in the UK indefinitely, is normally granted after having lived in the UK for 5 consecutive years. If the employee has lived in the UK for less than 5 years, they can apply for pre-determined status which can transition to 5 year status to fixed status. The application deadline for this system is June 30, 2021.

Employers looking to hire outside the UK should make arrangements sooner rather than later. Recruits must be sponsored by a UK employer who requires a Home Office license to do so. The processing of license applications can take 8 weeks or more.

Labor law

In the Queen’s speech in December 2019, it was announced that the government was planning a new employment law. This is expected to be released in 2021, with some of the measures emerging from the government’s earlier plan for decent work, including the right of all workers to apply for a more predictable and stable contract after 26 weeks of service, extending protection against dismissal to limit pregnancy and maternity discrimination and being flexible about the standard position unless an employer has a good reason.

You can find more information about the upcoming changes in labor law here:

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